Entries to Natural Order are dedicated to promoting an open & free society.

Monthly Archives: January 2015

News that Monetary Authority of Singapore cut its benchmark interest rate sent the Singapore $ to a 4-year low against the US $.

This is another sign of the endgame of so many years of central bankers complicity with suppressing interest rates to boost the temporary feel-good effects of credit-driven growth. A plunging euro along with downdraft for currencies of many of Asia’s industrialized economies signals a skirmish in what is shaping up to be a full-blown currency war & a tit-for-tat cycle of depreciating currencies.

As it is, the “best” way for governments to repudiate debts without outright default is to trigger domestic price inflation and/or to rely on currency depreciation.

All this has come to pass due to artificially-low interest rates arising from “monetary central planning” that punished savers while allowing governments to go on excessive borrowing-and-spending binges.

Of course, America’s central bankers are the primary villain in this tale. However, most central bankers chose to set their own policies in tandem & in response to move by the FED. In turn, these choices removed the disciplining effect of international inflows & outflows that would normally accompany growing public-sector debts & the flood of liquidity sent into financial markets.

Instead of price inflation, the tsunami of credit-driven liquidity brought an endless array of “bubbles” even as central bankers pretended to be innocent of such events.

Now it will become increasingly clear that “anything that cannot go on forever, won’t” … !

Credit-driven growth will soon reach its logical end as burdens of repayment of interest obligations become unsupportable at current interest rates, likely to lead to the “Mother of All Liquidity Crunches”.

Gordon Tullock once suggested that when models predict incorrectly & always in the same direction of error, it is fair to assume that it reflects intent of the modelers to deliver a message rather than to seek out some scientific “truth” … .

With claims of a new historical record (without noting clearly that means from 1840 for ground temps & much less for satellite measurements) being walked back, one has to wonder.

In the end, politicians queue to crow in unison about a “scientific consensus” (partly based on nearly all public funds going to support research with the same message) … the intent … ?

It is about providing a good cover story in the never-ending quest for more political power & more resources … in the end, citizens will have fewer freedoms & less control over their earnings.

The outcome of recent elections in Greece, the “Birthplace of Democracy”, provides more tragic evidence of the failings of democracy.

The dominant party, Syriza, utilized raw populism tainted with nationalistic overtones so that emotions & venality triumphed over common sense.

The Greek economy, already smothered by regulations & burdened by overbearing public-sector unions, is likely to face more of the same if Syriza keeps it promises,

As for “democracy”, while media reports noted that this was a “sweeping win” or “unequivocal victory” or “historic victory”, few mentioned that Syriza won with less than 40% of votes cast (i.e., maybe 25% of voting age population. Despite this smallish plurality, Syriza is but a whisker away from an absolute majority.

No doubt public-sector workers & their families as well as others receiving largesse supported this coup against economic realism.